When the FBI succeeded in infiltrating the cryptocurrency wallet held by the hackers of Colonial Pipeline that contained Bitcoin, by tracking the flow of funds through the blockchain, it served as a wake-up call for cybercriminals who believed that transacting in a digital currency automatically protected them from scrutiny. One of the fundamental principles of Bitcoin is its public ledger, which stores all transactions in its history and is visible to everyone. This is why more hackers are turning to cryptocurrencies like Dash, ZCash, and especially Monero, which has additional built-in anonymity features. Monero has become the preferred cryptocurrency for a growing number of high-profile ransomware criminals worldwide.
### History of Monero:
Monero was launched in 2014 by a group of developers, many of whom chose to remain anonymous. As explained in its white paper, privacy and anonymity are the most critical aspects of this digital currency. Monero operates on its own private blockchain, which hides nearly all transaction details. The identities of the sender and receiver, as well as the transaction amount, are concealed. Due to these anonymity features, Monero offers cybercriminals more freedom compared to some tracking tools and mechanisms available with Bitcoin. On the Bitcoin blockchain, you can see which wallet address was used, the amount of Bitcoin, where it came from, and where it is heading. However, with Monero, its blockchain obfuscates the wallet address, transaction amounts, and counterparties, which is what cybercriminals desire.
While Bitcoin continues to dominate ransomware attacks, more cybercriminals have begun requesting Monero. DigitalMint, a company that assists businesses with ransom payments, noted that REvil has offered discounts or requested payments in Monero in recent months. Monero was also a popular choice on AlphaBay, a massive market on the dark web that was shut down in 2017. From an illicit cyber perspective, it appears that Monero is experiencing a resurgence due to its inherently higher privacy compared to some other existing cryptocurrencies.
### Limitations of Monero:
There are significant barriers when it comes to mainstreaming Monero. First, it is not as liquid as other cryptocurrencies. Many regulated exchanges have chosen not to list it due to regulatory concerns. Practically, this means that cybercriminals find it challenging to convert their Monero into cash directly. The cryptocurrency may also be at greater risk of regulation regarding the bridge between fiat currency and crypto tokens. While the U.S. government can keep Monero at bay by marginalizing liquidity points, markets that allow peer-to-peer transfers will always be difficult to regulate. Additionally, there is nothing to keep hackers within the jurisdiction of the United States. Criminals can choose to conduct all transactions in venues that are not subject to the type of controls that U.S. regulators might impose.
### Bitcoin's Dominance:
Insurance coverage online is another reason why Bitcoin remains the preferred currency for most ransomware attacks. Insurance companies often refuse to pay ransom demands if they are made in Monero. Traceability is achieved much more easily using Bitcoin, given that its blockchain identifies the exact amounts of transactions and the addresses of both senders and recipients involved in the exchange. There is also an established infrastructure for authorities to monitor these transactions. Authorities maintain lists of Bitcoin wallets linked to various sanctions systems. While Monero offers a greater degree of privacy compared to Bitcoin, hackers have mastered specific techniques to anonymize transactions in Bitcoin. Hackers often resort to mixing services where they can combine illicit funds with clean cryptocurrencies. Therefore, although the Bitcoin blockchain is public, there are still ways to complicate the tracking of transactions to their final destination.
